In his State of the Union address on Thursday night, President Joe Biden highlighted his administration’s efforts to alleviate the burden of student debt for nearly 4 million individuals.
“When I was told I couldn’t universally just change the way in which we dealt with student loans,” Biden stated, “I fixed two student loan programs that already existed to reduce the burden of student debt for nearly 4 million Americans, including nurses, firefighters and others in public service.”
Following the Supreme Court’s rejection of Biden’s extensive student loan forgiveness proposal in June, his administration has diligently utilized its existing authority to alleviate the student debt load. To date, they have forgiven debt for almost 3.9 million borrowers, amounting to $138 billion in relief.
Repayment Plans That Have A Drive Of Income:
Income-driven repayment plans, which have been in existence since 1994, determine borrowers’ monthly payments based on a percentage of their discretionary income.
These payments are typically lower than those under standard repayment plans and can even be zero under certain circumstances. After a predetermined period, any remaining debt is forgiven. There are four distinct plans within this category.
However, many borrowers contributed to these plans for years without receiving the promised debt cancellation, noted higher education expert Mark Kantrowitz.
“The loan servicers weren’t keeping track of the number of qualifying payments,” Kantrowitz explained in a previous CNBC interview.
The Biden administration has been assessing the loan accounts of millions of borrowers to determine if they should have qualified for debt forgiveness. To date, over 930,000 individuals have benefited from this evaluation, resulting in over $46 billion in debt cancellation.
The majority of individuals with federal student loans are eligible for income-driven repayment plans and can explore the various options and apply through Studentaid.gov.
Recently, the Education Department also announced plans to forgive the debts of borrowers who have been in repayment for ten years or more and initially borrowed $12,000 or less. To qualify, borrowers must be enrolled in the administration’s new Saving on a Valuable Education (SAVE) plan.
